California Institute of TechnologyIndustrial OrganizationEc 106Ec 106: Topics in Industrial OrganizationMon/Weds. 10.30am-12 noonLocation: Baxter 315Professor: Matthew Shume-mail: [email protected]: Baxter 301Doffice hours: by appointmentCourse Website: http://www.hss.caltech.edu/~mshum/ec106/ec106.htmlIt is a requirement to check this website regularly: you are responsible for all informationposted there. Lecture notes and the problem sets will be posted on the website.1 OrganizationSince this is an upper-level class, student participation and student presentations constitute anintegral part of this couse. Grades will be determined as:1. Problem sets/paper presentations (30%)2. Midterm exam (30%)3. Class presentation/paper (40%)Note that there will be no final exam. Instead, the bulk of the grade will be determined by aclass project. For this project, you will give a 30 mins. in-class presentation, as well as a 15-pageaccompanying paper.2 IntroductionThis course applies economic theory to the study of the organization of firms, industries, andmarkets. It draws on game theory, transaction cost analysis, information theory, and the economicanalysis of the law to provide detailed consideration of firm behavior (including business practicesand strategies) and the goals and effects of government intervention.Since this is a “topics” class, what we cover in class can be flexible, depending on the interestsand previous experience of the students. This year, we will focus on consumer decision-makingin environments where they face uncertainty, with a focus on internet markets. We will cover:auctions, price search, product differentiation, and consumer learning. For each topic we will coverthe theory as well as consider applications from the real world (primarily from the internet).California Institute of TechnologyIndustrial OrganizationEc 106Topics to be covered:• Auctions: theory (I)• Applications• Auctions: theory (II)• Applications• Auctions: data and experiments• Search and price dispersion: theory• Applications• Product differentiation• Applications• Learning and dynamics of consumer